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RDI shares slump after takeover offer dropped

Aviva Commercial Finance has agreed to an almost six-month period to resolve covenant breach

24 April 2019 - 10:24 Nick Hedley

UPDATED 24 April 2019 - 12:58

An RDI property in London. Picture: RDI

Shares in RDI Reit slumped 14.7% to R24.75 on Wednesday morning, even as the landlord said it had reached a standstill agreement with a firm that finances four of its malls in the UK.

The sell-off came after RDI said after the market’s close on Tuesday that it had rejected a takeover offer from Cromwell Property Group.

“The board considered the proposal, which undervalued the company and its prospects, and, as a result, the board took the unanimous decision not to support a further period of due diligence,” RDI said on Tuesday.

Meanwhile, RDI has been granted a reprieve. It said earlier this month that after four shopping centres were revalued by financier Aviva Commercial Finance, the lender’s loan-to-value ratio on this facility breached its covenants.

The parties said previously they had had until Tuesday to “cure the covenant breach, which would require a cash cure of approximately £9.4m or the addition of new collateral”.

But RDI said on Wednesday a standstill period, extending to October 11 2019, has been agreed to.

“Aviva has confirmed that it will not take any action to accelerate its security under the facility agreement. RDI and Aviva have agreed to progress a consensual sales process or restructuring of the facility during this standstill period,” RDI said.

The four shopping centres secured by the Aviva facility represented about 12% of RDI’s portfolio at last count.